New Delhi

India has sealed a significant trade and economic partnership with the European Free Trade Association (EFTA), comprising Switzerland, Norway, Liechtenstein, and Iceland.

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This landmark agreement, signed on Sunday, involves a binding commitment of $100 billion in investments over the next 15 years.

Prime Minister Narendra Modi hailed the pact as a gateway to increased collaboration with EFTA nations, known for their global leadership in innovation and research.

Investment commitment and economic impact

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Under the Trade and Economic Partnership Agreement (TEPA), EFTA has pledged to bolster foreign direct investments (FDI) in India by $100 billion over the next 15 years.

Commerce and Industry Minister Piyush Goyal highlighted the significance of this modern and ambitious trade agreement, marking India's first Free Trade Agreement (FTA) with four developed nations.

The pact is poised to enhance economic ties between India and the European bloc, fostering mutual growth and job creation.

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Sectoral impact and tariff concessions

According to a report by the Economic Times (ET), the agreement entails substantial tariff concessions, benefiting various sectors such as watch making, chocolates, and machinery.

Swiss imports, including watches and chocolates are set to enjoy duty-free imports after a phased elimination period.

Currently, custom duties apply to 95.3 per cent of Swiss imports.

A Reuters repot cited Guy Parmelin, a Swiss economic representative, who highlighted the vast potential for trade and investment in the Indian market.

He noted that the agreement was the culmination of 21 negotiation rounds. India ranks as the fifth-largest trading partner of the EFTA grouping, following the European Union, the United States, Britain, and China.

The estimated total bilateral trade between India and the EFTA amounted to $25 billion in 2023, according to the trade ministry.

The Swiss government described the agreement as including a thorough and enforceable section addressing trade and sustainable development.

Apart from that, the pact is expected to facilitate cheaper imports of machinery, enhancing India's industrial capabilities.

Additionally, concessions on processed agricultural products (PAP) from India are anticipated to further stimulate trade.

Emphasis on services and visa commitments

Services form a crucial aspect of the agreement, with both India and EFTA extending concessions in various sub-sectors such as accounting, auditing, and legal services.

Notably, EFTA's commitments in audio-visual services, including gaming and animation, hold significant promise for India's burgeoning service sector.

Moreover, India has secured commitments regarding visa regulations, ensuring smoother mobility for categories such as intra-corporate transferees and contractual service suppliers.

Industry response and export opportunities

Industry leaders have welcomed the pact, citing its potential to boost India's export potential and create employment opportunities.

ET cited Chandrajit Banerjee, the Director General of the Confederation of Indian Industry (CII), who highlighted the historic $100 billion investment commitment from EFTA, indicating its potential to stimulate economic growth.

Improved market access for Indian goods in EFTA markets is expected to expand export avenues, further enhancing India's global trade footprint.

(With inputs from Reuters)